Rent growth has reached its lowest level since 2020, enabling the typical renter to put aside an additional $193 per month — or $2,316 per year — toward their down payment or other savings goals.
The median asking rent increased 1.8 percent year over year to $1,910 in March, Zillow reported on Tuesday. Multifamily rents rose 1.3 percent year over year to $1,757, while single-family rents ($2,225) posted the slowest annual growth in Zillow’s data series at 2.5 percent. These trends represent a notable improvement in affordability, the report said, with the typical household spending 26.5 percent of their income on housing costs — finally nearing the pre-pandemic share of 25.8 percent.
Renters in the Sun Belt are experiencing the biggest savings, with the typical Austin, Texas, renter ($3,182) and the typical Tampa, Florida, renter ($3,110) getting four figures back in their pockets, after factoring in income growth and rent declines. Rental trends in a few Western markets, including Denver ($3,002) and Los Angeles ($2,438), are also yielding significant annual gains for renters.
Kara Ng | Credit: Zillow
“For the first time in years, income growth is outpacing rent increases,” Zillow Senior Economist Kara Ng said in the report. The typical household has an extra $2,318 a year, enough to cover months of groceries, a full year of phone and internet bills, or make meaningful progress on savings.”
In addition to slowing rent growth, Zillow found that two in five rental listings offered concessions in March. The concessions, the portal said, include a free month of rent, waived application or pet fees, or discounted parking. These incentives can save the typical renter at least $2,000, no small sum considering that less than half of aspiring homeowners (48 percent) say they’ve saved enough for a down payment.
Softening rental and for-sale trends have created a generous window of opportunity for renters to become homeowners. Despite a climb due to the Iranian conflict, mortgage rates are more favorable than this time last year, which has driven the mortgage payment on a typical U.S. home down 4.4 percent year over year.
“For renters who have spent years feeling as though homeownership is slipping out of reach, that combination — a growing savings cushion and lower monthly payments — is a meaningful shift in the math,” the report read.
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Despite affordability gains in March, more work remains to be done to improve homebuying odds for the typical household.
The income a household needs to afford the typical rent is $76,400 — 35 percent higher than pre-pandemic norms. Meanwhile, a household needs to earn roughly $114,000 to afford a median-priced existing home, a 70 percent increase from 2019 ($67,000)
That’s keeping some prospective buyers within the rental market, with nearly 1 in 13 for-sale shoppers also browsing rentals on Zillow.
“This moment of relief doesn’t erase the affordability challenges that built up over time, but it does give renters more flexibility than they’ve had in years,” Ng said.
